Supply Influx, Demand Erosion Challenge Lodging

New York City has seen an abundance of new supply in the hotel sector. (Photo: W45lin)

IRVINE, CA—Own a hotel property in the nation’s top destination for tourism? Now might be a good time to sell, says Ten-X in its latest Quarterly Hotel Monitor report. Although New York City isn’t the top “sell” market for lodging properties, like its neighbors in Ten-X’s top five it’s seeing declining fundamentals in the sector, in most instances aggravated by an influx of new supply.

With a domestic economy that has managed to rebound from a series of global shocks, the hotel sector is expected to continue seeing modest growth through 2018, says Ten-X. The firm has forecast annual room rate increases of about 3.5% and RevPAR increases of 4% for this year and 3.7% in each of the two years to follow. With GDP gradually expanding, occupancies are expected to hit a record peak of 73.5% by ‘18 before declining to roughly 68.7% amid an expected cyclical downturn.